As we previously cautioned, unpaid internships can run afoul of the Fair Labor Standards Act, and the Department of Labor is stepping up enforcement efforts as more college grads are offereing their services for free in a tough job market.
The issue is whether the intern should be considered an “employee” under the FLSA and therefore subject to wage and hour laws like overtime and minimum wage. To aid employers in making this determination, the DOL recently issued Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act, which sets forth 6 criteria employers must apply to determine whether an intern should in fact by paid as an employee:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- The employer derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If you are uncertain as to whether the criteria are met, keep in mind that the DOL defines the employment relationship “broadly.”